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“Based on these studies alone, we concluded that the discount
applicable to the Partnership’s block should approximate 35
percent.”
We find several flaws in Mr. Frazier’s analysis. For
example, Table 31 indicates that MIL’s projected revenue of
$681,000 is consistent with a discount of 51.9 percent based on
data from the Willamette studies. The Willamette studies are IPO
studies rather than restricted stock studies, and they do not, so
far as we can tell from Mr. Frazier’s testimony, analyze firm
revenues.35 Table 31 also indicates that one can infer a
discount from the “Hertzel and Smith” study based on the
proportional size of the offering, although Mr. Frazier gives no
indication that that study drew any correlations between that
variable and the level of discount. Furthermore, under the
heading “Size of Block as % Total Outstanding” in Table 31, the
entry corresponding to MIL is “1.0%”, when in fact each half of
the gifted interest represents a greater than 40-percent interest
with respect to MIL. Similarly, although there is no entry in
Table 31 for the dollar size of the gifted interest, it is
evident that the “>35%” discount inferred from that variable in
Table 31 is based on the same mischaracterization of each half of
35 Indeed, under the heading “Revenues” in Table 31 of Mr.
Frazier’s direct report, the entry corresponding to “Willamette”
is “NA”.
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